The customer journey through the ‘purchase funnel’

How do consumers recognize their need for life insurance, shop for it and eventually purchase coverage? The customer journey involves a trip through the Purchase Funnel, according to LIMRA research.

Elizabeth Caswell, director of insurance markets research at LIMRA and LOMA, and Jonathan Yoon II, vice president of life marketing with Nationwide, will explain the latest research on each stage of the life insurance purchase journey during the LIMRA Life Insurance & Annuity Conference.

LIMRA’s most recent research focused on how millennial consumers approach the life insurance purchase, as well as how financial professionals figure into the process.

Some studies show millennials using a wide range of retirement resources.

One main finding of the LIMRA research is “the importance of financial advice really can't be overstated,” Caswell said.

Caswell said LIMRA research found half of all individual life insurance sold over the previous 24 months was sold to millennials while about 15% was sold to baby boomers. Four in 10 life insurance purchases were made for someone who didn’t have any coverage on themselves.

“I think we will continue to see a lot of activity among older generations as families take different forms,” she said. “We also see that millennials and Generation Z are starting later in terms of their family formation and development, so it’s important that they get advice.”

How are these younger consumers getting advice? Caswell said the research showed that many of them used referrals from family and friends to find help.

Young consumers “know they can't go it alone; they want the collaboration,” Caswell said. But young consumers are also concerned about trust.

“They want the flexibility to do things online when they want to. And then they want to be able to check out of the process at any point and talk to a financial advisor,” she said.

When LIMRA looked at ways young consumers begin the purchase journey, they found that the top way was to go to a particular carrier’s website. The second most popular way was to sit down with a professional.

That finding indicates the importance of a carrier’s branding, Caswell said.

“I’ve heard it said that millennials are the most ethical generation ever, and Gen Z is the generation most focused on equity,” she said. “So they want things to be handled fairly and that demand that fairness in every aspect of their lives. They demand that of their brands as well. They want authenticity.”

When a financial advisor is part of the purchase journey, the rate of declination after the consumer receives a quote drops substantially, Caswell said.

“Our research found the declination rate drops from 44% to just 8% when a financial advisor is connected at that point, so that is a critical touch point,” she said. “The advisor is critical in helping the consumer overcome the biggest objection to purchasing life insurance, which is expense.”

Caswell said three main takeaways from the research are:

1. Knowing your customer is essential, and it’s a never-ending process.
2. Investments in life insurance must show a return on assets.
3. Technology is not the only answer; you cannot overlook the human connection.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.

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